Safran has signed an agreement to acquire Rockwell Collins’s actuators, pilot controls, and special products business, the French company disclosed in its first-half financial results. Subject to regulatory approval, the acquisition is expected to be finalized in the first half of next year. A Collins spokesperson confirmed the sale of this business will help clear antitrust hurdles for Collins’s acquisition by UTC.
This move will expand the electrical actuation and flight control business lines of Safran Electronic & Defense and Zodiac Aerospace, which Safran purchased earlier this year. "In particular, [it] will allow Safran Electronic & Defense and Zodiac Aerospace (Aerosystems) to increase their critical mass in these sectors and to eventually enhance their competitiveness," Safran said.
The Collins division produces cockpit pedestal systems, pilot control systems, and throttle control modules, among others. It also provides a full range of fly-by-wire cockpit control devices, from modular controls to fully integrated pilot-control systems. Further, Collins is also a specialist for horizontal stabilizer trim actuators for business jets, airliners, and military aircraft.
Safran and Dassault Aviation have reached an amicable settlement regarding the indemnity to be paid to Dassault related to the termination of the Silvercrest engine for the Falcon 5X. Safran will pay a compensation amounting to $280 million, while the other conditions of the program that were applicable to the Silvercrest contract remain unaffected, in particular, the cash contribution already paid by Safran. This amount is covered by the provisions previously booked by the French group, and the payment will be spread over three years beginning this year. Safran confirmed that this agreement will not change its profitability and cash flow outlook. Dassault and Safran said that subsidiaries that are partners on the new Falcon 6X, launched in late February with the Pratt & Whitney Canada PW812D engine to replace the 5X, signed contracts to supply equipment for this new program.
Separately, Safran reported it has signed an agreement with United Technologies to acquire Rockwell Collins’s actuators, pilot controls, and special products business. The acquisition should be finalized in the first half of 2019. Safran declined to provide any further information on the size of those businesses. These operations will expand the electrical actuation and flight control business lines of Safran Electronic & Defense and Zodiac Aerospace (which Safran purchased in 2018).
Regarding Zodiac Aerospace businesses (consolidated for 10 months in 2018), Safran expects a contribution in the range, with €3.6 billion ($4.2 billion) to €4 billion to its adjusted revenue and €260 million to €300 million to its adjusted recurring operating income. Safran said it is "on track with the integration work and in line with the financial roadmap."
Safran has released good results for the 2018 first half-year with an increase of 32.6 percent of its adjusted recurring operating income, at €1.386 billion, on a reported basis compared to €1.045 billion in H1 2017. It represents a record of 14.6 percent of the revenues, which have reached €9.5 billion. An increase of 23.9 percent on a reported basis, including a four-month contribution of €1.516 billion from Zodiac Aerospace. On an organic basis, adjusted revenues grew 10.1 percent. Growth on an organic basis came mainly from the propulsion branch (+12,9 percent, €4.74 billion) and Defense (+9.2 percent, €651 million), while aircraft equipment has an increase of 5.6 percent with €2.58 billion. "Civil engine aftermarket revenue grew 12.5 percent in US$ terms in H1 2018 (+3% in € terms) thanks to higher spare parts sales," added Safran. For the full year, Safran expects an increase of the adjusted revenue on an organic basis in the range of 7 percent to 9 percent, and recurring operating income to grow around 20 percent.
Safran reaffirms that ramp-up of Leap production, an engine developed with GE in the joint company CFM International, is in recovery after facing some concerns in delivery. "Those delays will be reduced and solve up to the end of the year and we plan to deliver around 1,100 Leap engines in 2018, as previously indicated," said a spokesman. Leap deliveries almost tripled in this year's first half to 438 engines compared with 147 engines in H1 2017. Following the Farnborough Airshow, the Leap order book stands at 15,450 engines (orders and commitments) and CFM56 backlog stands at 434 engines. CFM56 has a production rate sustained with 591 units delivered in H1 2018 compared with 710 units in H1 2017, in line with customers’ demand. CFM International expects to deliver around 1,000 CFM56 engines this year.